In one of my trips I was asked to meet an IFA. I normally don’t make those lone meetings..but this time I did. This was an IFA with an aum of Rs. 200 crores and that too in a small town. This was a big amount, and the man was in his late 40s or early 50s – I was guessing. He said he was doing well, paying a lot of taxes, and had a good equity portfolio too.

He felt he was handling his risk well – he had a small amount of term insurance – but was convinced that he did not need that too. He was beyond term insurance, but had adequate medical insurance. Of course he had a lot of wealth, and was surely beyond medical insurance too..but that is a different story.

So I asked him…how liquid was his net worth. Well not much he admitted. It was in Real Estate and in mutual funds. In mutual funds he had some liquid funds and otherwise his money was largely in equities. Equities as well as mutual funds which used equities as its assets. He of course did not have any debt, and his income was more than his needs by a big factor of X. He was very confident that he was handling his portfolio well, and there is nothing that I could do. I could have left – this was a Pr exercise and I really had no role to play.

So I asked him my favorite question: “what would happen if he died tonight”. Well he was not prepared for this question…he fumbled..

  1. He had not made his will.
  2. He did not have a nominee in 2 out of his 11 relationships with Asset Mgt companies.
  3. His wife/children had no clue about his total assets, income, or how his business was being run.
  4. He had 3 children – and his son was in class 11. One daughter was married and the other one was studying abroad. Wife was a home-maker. He did not think it was necessary to tell her anything.
  5. He of course could not make a cup of coffee. He had learnt how to make tea but had not made tea in the past 15 years. Never.

I said “when you are not ready to hear what I have to say, please don’t call me to your office”.

Last heard of he was looking for an IFA to set his accounting life right.

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